> ## Documentation Index
> Fetch the complete documentation index at: https://docs-staging.centuari.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Refinancing

> Roll and manage borrowing positions

## Overview

Refinancing allows you to extend your loan at maturity or roll to better rates mid-term.

## Auto-Refinance

With auto-refinance enabled, your loan automatically extends at maturity at the best available rate. [See full auto-refinance details](/products/fixed-rate/auto-refinance).

### Rate Ceiling

Protect yourself from unfavorable refinancing:

```
Original Loan: 8% APY
Rate Ceiling: 10% APY

At Maturity:
- If market rate is 9%: Refinances at 9% ✓
- If market rate is 12%: Refinance fails, must repay ✗
```

## Manual Refinancing

For positions without auto-refinance or when you want to change terms:

<Steps>
  <Step title="Before Maturity">
    Create new borrow order with desired terms
  </Step>

  <Step title="When Matched">
    Use new loan proceeds to repay old loan
  </Step>

  <Step title="Result">
    Single position at new rate/maturity
  </Step>
</Steps>

## Mid-Term Rate Improvement

If rates have dropped significantly:

<Tabs>
  <Tab title="Strategy">
    1. Check current market rates
    2. Calculate savings vs. effort
    3. If worthwhile, create new loan and repay old

    **Example**:

    * Original: \$10,000 at 10% for 6 months remaining
    * New: 7% available
    * Savings: \$150 over 6 months
    * Worth refinancing if savings > hassle
  </Tab>

  <Tab title="Calculation">
    ```
    Original remaining interest: $10,000 × 10% × 0.5 = $500
    New interest: $10,000 × 7% × 0.5 = $350
    Savings: $150

    Consider: Is $150 worth the effort?
    ```
  </Tab>
</Tabs>

## Interest Compounding

Each refinance compounds interest:

```
Loan 1: $10,000 at 8% maturing June 1
  Interest: $197
  At maturity: $10,197

Refinance (interest added to principal):
Loan 2: $10,197 at 8% maturing July 1
  Interest: $200
  At maturity: $10,397

After 1 year (4 refinances):
  Total owed: ~$10,824
  Effective rate: 8.24% (vs 8% simple)
```

## Health Factor at Refinance

Refinancing affects health factor:

```
Before Refinance:
  Collateral: $15,000
  Loan: $10,000
  Health Factor: 1.76

After Refinance (interest added):
  Collateral: $15,000
  Loan: $10,200 (with interest)
  Health Factor: 1.72 (slightly lower)
```

<Warning>
  If health factor is already low, refinancing may push you closer to liquidation. Consider adding collateral before refinancing.
</Warning>

## Auto-Refinance Collateral Top-Up

If health factor is low at refinance:

| Setting         | Behavior                             |
| --------------- | ------------------------------------ |
| Auto top-up ON  | Protocol adds collateral from wallet |
| Auto top-up OFF | Refinance may fail if HF too low     |

## Failed Refinance

What happens if auto-refinance can't execute:

| Reason                | Outcome                       |
| --------------------- | ----------------------------- |
| Rate ceiling exceeded | Notified, must repay manually |
| No market liquidity   | Notified, must repay manually |
| Health factor too low | Notified, must add collateral |

**Grace Period**: After failed refinance, you have time to repay before liquidation. Don't ignore notifications!

## Best Practices

<CardGroup cols={2}>
  <Card title="Set Rate Ceiling" icon="gauge-high">
    Protect from refinancing at unexpectedly high rates
  </Card>

  <Card title="Monitor Health Factor" icon="heart-pulse">
    Ensure buffer for interest compounding
  </Card>

  <Card title="Enable Notifications" icon="bell">
    Know immediately if refinance fails
  </Card>

  <Card title="Plan Ahead" icon="calendar">
    Know your strategy before maturity
  </Card>
</CardGroup>

## Refinance vs. Repay

| Scenario                       | Best Choice                      |
| ------------------------------ | -------------------------------- |
| Need continued leverage        | Refinance                        |
| Rates have risen significantly | Repay if possible                |
| Health factor is marginal      | Consider repaying to reduce risk |
| Have cash to repay             | Evaluate interest savings        |

## FAQs

<AccordionGroup>
  <Accordion title="Is there a fee to refinance?">
    Standard protocol fee (0.1% of interest). No special refinance fee.
  </Accordion>

  <Accordion title="Can I change maturity on refinance?">
    With auto-refinance, maturity stays same by default. Configure custom maturity in settings.
  </Accordion>

  <Accordion title="What if rates are much higher at maturity?">
    Rate ceiling prevents refinancing above your limit. Plan for either higher rate acceptance or repayment.
  </Accordion>
</AccordionGroup>